You invest $1000 a year into a retirement account that earns four percent interest annually. How much is the account worth after 20 years?

Answer 1

To calculate the future value of the retirement account after 20 years, we can use the formula for compound interest:

FV = PV x (1 + r)^n

Where:
FV = future value of the account
PV = present value of the account ($1000)
r = annual interest rate (4% or 0.04)
n = number of years (20)

Plugging in the values, we get:

FV = $1000 x (1 + 0.04)^20
FV = $1000 x (1.04)^20
FV = $1000 x 2.191058
FV = $2191.06

Therefore, the retirement account would be worth approximately $2,191.06 after 20 years.